Hodge product claims large section of flexible lifetime market
Safe Home Income Plans (SHIP) figures show a significant increase in consumer uptake of Flexible Mortgage plans and Hodge are happy the product, launched a year ago, has proved a success.
Hodge managing director Jon King, who is also chairman of SHIP, said: “Our success has been achieved by marketing our products exclusively through IFAs. Our Flexible Mortgage product has been enthusiastically welcomed by financial advisers across the UK since its launch last February.
“Its popularity arises from its simplicity compared to others in the market. In particular, the ability to withdraw amounts of just £2,000 upwards from the cash reserve, and the straightforward early repayment charges. These charges are simple percentages of the amount repaid, reducing in year six and expiring after year ten, whilst other products in the market have complex penalties which confuse customers and their financial advisers.”
Flexible lifetime mortgages allow customers to take an initial lump sum, but to decide for themselves if and when they need to withdraw further funds from the cash reserve, up to the tenth anniversary of the plan. Their overall interest costs are reduced because interest is only applied from the date of each withdrawal, rather than to a large cash sum taken at outset.
Hodge believes IFAs must be given full support and product training if the market growth is to be sustained:
“Education is the key to the future of equity release in the UK, which is why we continue to run our IFA training events. Consumers must be given a clear choice in what remains to them a largely unfamiliar product area, and IFAs are best placed to provide the independent advice they need.” said Jon King.
Hodge has also seen major success in other areas and is a major player in the Reversion Plan market. In 2005 total UK Home Reversions business accounted for £55m worth of new business, up 35 per cent on the previous year and Hodge has a 30 per cent share of the market.
SHIP reports that in the last quarter of 2005, £297m of new equity release business was written, with results for the year reaching £1103m. This compares to £572m of business written in 2001.